THE 2024 OUTLOOK
After another year of steeply rising travel costs, is a modicum of stability appearing on the horizon?
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The word on everybody’s lips moving into 2024 is cost. Corporates are feeling the pinch after 24 months of price hikes but may get some respite in the year ahead as industry forecasts point to a degree of stabilisation.
While business travel volumes are expected to continue growing in 2024, air fares, hotel rates and car rental costs are all expected to rise in the year ahead but, thankfully, at a more moderate rate according to several industry reports. After dramatic price increases in 2022 – albeit from depressed, Covid-induced lows – the rate at which travel costs rose in 2023 slowed, and will do so again in 2024. Average air fares, hotel rates, and car rental costs are all expected to increase by between 1.8 per cent and 3.6 per cent (see below for all the details).
Business travel budgets are also poised to increase, but to what extent will be determined by ongoing inflationary pressure and geopolitical tensions – particularly the ongoing conflicts in Ukraine and Gaza. Both will also affect Europe’s air traffic capacity in the year ahead. Nevertheless, IATA expects 2024 capacity to increase 8.8 per cent versus 2023 and to be 7 per cent greater than in 2019.
With more organisations operating flexible, hybrid or remote working models, the need to bring teams together to meet face-to-face will continue into 2024, with internal meetings set to drive growth in the global M&E market over the next 12 months. As such, meeting budgets are also increasing, with spend expected to rise by 2.8 per cent in Europe in 2024.
As seen in 2023, the urgent need to reduce travel-related carbon emissions will continue to weigh on both travel buyers and suppliers. According to a recent study, multimodal trips now account for almost a third of business journeys in Europe, with rail set to become a more prominent feature in corporate programmes moving forward. However, delays in EU regulation regarding emissions standardisation and multi-modal ticketing may hinder progress.
Revisiting the 2023 Outlook
Looking back at our 2023 Outlook published in December last year, cost concerns and fears of increased geopolitical instability all appear warranted.
Several contributors, such as the BTA’s Clive Wratten, called for greater collaboration to drive sustainable business travel initiatives, but the significance of EU-level regulation in actioning change was seemingly overlooked. BT4Europe, the body that represents 13 business travel associations across Europe, made this a priority in 2023 and will continue to support proposed changes on transport, sustainability and digitalisation into 2024.
Supply chain disruption and an ever-evolving tech landscape were also flagged among contributors. Julia Lo Bue-Said, CEO of the Advantage Travel Partnership, rightly predicted ongoing content complexity and significant operational gaps when it comes to NDC capabilities.
Several others pointed to ongoing challenges related to staff shortages. Independent consultant Chris Pouney even suggested that AI and robotics process automation could allow travel managers “to truly get out of the weeds” and free up time to deliver more strategic solutions to their companies. However, no one anticipated the extent of the hype surrounding ChatGPT and generative AI in 2023, or the speed at which generative it could improve efficiencies in the business travel sector. In fact, some corporate travel managers are already piloting new AI integrations to explore different use cases, while others believe 2024 will see an even more widespread adoption of AI and chat technologies to replace human-based services.
Read on to find out what our contributors believe is coming down the pipe in 2024, followed by a round-up of key industry price forecasts for the year ahead.
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2024 INDUSTRY PREDICTIONS
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Pricing pressures
Catherine Logan, regional senior vice president EMEA & APAC, GBTA
Rising costs and pricing pressures will continue to be a significant factor in business travel as we head into 2024, with pricing fluctuations across industry verticals, business sectors and global regions. While business travel spend continues to rebound and grow globally to an estimated $1.5 trillion by the end of 2024, there will be a delicate balancing act between demand, cost management, the distinct needs of the business traveller, and environmental, social, and governance concerns. Notably, ESG will play a pivotal role, driving a greater shift towards purposeful travel to minimise carbon impact. Companies are expected to prioritise sustainable travel programmes, incorporating initiatives like multimodal travel and Sustainable Aviation Fuel, and at the same time balance the priorities of the business traveller as new working patterns continue to evolve.
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AI will drive efficiency
Guy Snelgar, global business travel director, The Advantage Travel Partnership
AI has revolutionised the travel industry and in this ever-evolving digital landscape, choices are seen as limitless and customers expect travel recommendations to be based on their individual needs, from the destination through to the itinerary. There is no doubt that recent advances in generative AI are now bringing practical examples that can be a huge benefit to travel management, especially around tasks that involve spotting trends and patterns in vast amounts of data. That could include spotting anomalies in a company’s travel spend reports, refining complex fare search algorithms in the GDS to present the more relevant options more quickly, or learning how to make more personal recommendations to travellers.
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Demand won’t slow
Michael Riegel, CEO, Navan, EMEA
Demand for travel has rebounded faster than many expected. The resurgence in demand will come with challenges. Strong demand across international travel has meant that pressure is acute for airlines. Forced to cut capacity in the wake of the pandemic, they are reinvesting to return routes and hire staff. Until the airlines can increase supply, expect continued disruption to flights through much of 2024. In business travel, disruptions will maintain the need for increased levels of support, as travellers will need to be able to change their travel plans on short notice, at a time when specialist staff are already in short supply. Business travel solutions will have to innovate to adequately support customers. There will be increasing reliance on new technologies, such as generative AI, to support customers. AI is already providing human-grade support, but these integrations will need to widen in scope.
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Small meetings in focus
Denis Vilovic, co-founder and CEO, TROOP
Following the increase in remote working we’ve seen a notable rise in off-site meetings, with a shift from the big annual company all-hands, to regular smaller internal and client gatherings as companies look to unite dispersed teams. Historically, these meetings, particularly the smaller team or client meetings, have been unmanaged with no true visibility of the total costs involved. But companies today are looking to manage travel and M&E programmes to help drive cost efficiencies and savings. In 2024 the focus will extend beyond formal business travel programmes, to also include M&E, particularly small meetings, prompting companies to reassess how they manage these smaller, historically unmanaged interactions. This is a strategic shift to align M&E with business travel objectives and to integrate smaller meetings into the company travel policy to optimise cost savings and enhance visibility.
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Hotels change tactics
Laura Busby, commercial director, Good Travel Management
A growing trend in 2024 will be that of hotels shifting from pushing occupancy to instead growing revenue per room. In short, they will be accepting lower occupancy as they prioritise selling rooms at higher rates instead. Corporations are likely to spend more on hotel accommodation in the coming year. Because of this, we are also seeing an increased trend in certain booking behaviours among customers. More than half (54 per cent) of our customers tend to book flex rates over non-flex rates and as costs continue to rise, we believe this percentage will increase next year. In addition, we predict there will be fewer business trips in 2024, but the ones that do take place will have a longer duration, with companies trying to maximise the ROI of each trip. Our data also shows that low cost carriers now represent one in three fares globally, showing price point is still important for those booking business travel.
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Traveller tensions
Amy Padgett, vice president, travel marketing strategy, Concur Travel
As organisations hammer out their business travel plans and policies for 2024, another year of budgetary caution will become a source of rising tension with employees. Although budgets may increase, doing more with less in response to inflation will remain the organisational mantra of 2024. We’re already seeing friction between employees and employers regarding flexibility and hybrid working. The increasing Gen Z workforce representation will also drive employers to adopt the latest technologies and treat sustainability as a top organisational priority to compete for young talent. As organisations increasingly explore cost-cutting measures, like requiring that employees stay in less expensive accommodation, enthusiastic business travellers are likely to put the pressure on employers to better meet their needs and expectations.
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Legislation and innovation
Andrew Cruttenden, general manager, Trainline Partner Solutions
The French government made headlines earlier this year when it banned some short-haul domestic flights – a signal of intent which other governments will be watching closely and may follow. Rail’s clear sustainability advantage over air and road will become increasingly important. But to ensure business travellers can make lower carbon travel a priority, private sector innovation to improve access to rail content is also vital. Across Europe there’s a wave of liberalisation, with new carriers taking on state incumbents, and now extensive talk of competition for Eurostar too. This competition is driving up standards and driving down prices, making rail more attractive and helping reduce carbon emissions from travel. This trend will continue, making it increasingly important for retailers to improve access to rail content and provide business travellers with a seamless digital experience.
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Training on track
Emma Gregory, director, Urbanberry Recruitment
2024 is set to continue to be a year of growth for many TMCs and we’re excited to support that. We hope to see the continuation of more training academies that some companies have introduced again in 2023, welcoming non-travel staff into the sector. It’s important these are properly managed with graduates given thorough support once “live”. Staffing levels are definitely more stable than the last 18 months but many job seekers are quick to mention that some employers are failing to replace experienced leavers, instead merging their responsibilities and increasing pressure on existing teams. We’ve noticed a decline in consideration of transferable skills – interesting considering that two years ago the industry was shouting from the rooftops about our own transferable skills to other sectors. Let’s hope in 2024 more companies can start to recognise people for their potential, not just exact experience.
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Emissions standards
Christoph Carnier, president, VDR
With regard to the past year, we can certainly speak of a recovery in the business travel market, but not in all countries equally. We also remain exposed to geopolitical tensions, which will continue to have an impact on the business travel industry. This is unlikely to change in 2024. The topic of sustainability will remain and, above all, the identification of global reporting standards – for example, for hotels – in order to create reports and thus manage the carbon footprint. Travel technology has also become increasingly important in recent years. New and diverse distribution channels and the associated opportunities for customised offers are contributing to this. In addition, the topic of AI will have a massive impact on travel technology over the next two years. It remains challenging and professional travel management is required to understand the market.
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Technology’s key role
Arlene Coyle, senior vice president, commercial, Amadeus Cytric Solutions
Sustainable travel programmes will continue to be top of mind in 2024 but our recent research showed a third of large companies don’t have a sustainable travel policy in place. Transparency, clarity and specific objectives that count with C-level buy-in are much needed. Technologies that help to accelerate the development of Sustainable Aviation Fuel and remove CO2 from the atmosphere will need investment to help the industry meet its targets. The technology used by corporate travellers to book their trips can also have a major impact on the total CO2 emissions linked to business travel. As a first step, carbon emission reporting, allowing the company to measure its impact, is already improving. But there is still so much more that can be done to steer travellers towards more environmentally friendly alternatives.
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Content consternation
Scott Davies, chief executive officer, Institute of Travel Management
What came through loud and clear in ITM’s 2024 Buyer Priorities Survey is that the biggest challenge facing travel managers will be access to full content, and reliance on OBTs to deliver and fulfil that content, to ensure programme compliance. In fact ‘OBT optimisation’ is the top priority in 2024 for the second year running. Buyers tell us that, in general, booking tool technology needs to support their programmes better in terms of user experience, content and guiding more sustainable travel options. Our first ever survey of supplier members also revealed that they are facing multiple challenges over the next 12 months including rising costs and ongoing talent shortages. But on a positive note, suppliers are investing heavily in the corporate travel sector – 71 per cent have increased their investment year on year.
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Time for AI to take off
Scott Wylie, chief technology officer, TripStax
Investment in Generative AI, which allows computers to engage with humans in natural language, is going to really take off in 2024. This is the first year that many companies are carving out a specific line in their budgets for AI development. Yet although generative AI is developing fast, it still has a long way to go before it can routinely handle most travel bookings and traveller servicing. I predict it will be 2025 before we see truly meaningful business travel AI products. We will also hear a lot more about carbon removal as opposed to carbon offsetting in 2024. Developments in how carbon dioxide can be removed from the air and stored safely will be a fundamental focus. In my view, carbon removal is much more impactful than planting trees or promoting sustainable aviation fuel and I would like to see a shift towards investment in it in 2024.
2024 PRICING FORECASTS
GLOBAL SPEND
$1.5 trillion
Global spending on business travel is expected to reach $1.5 trillion in 2024, exceeding pre-pandemic levels for the first time, according to the Global Business Travel Association’s latest forecast. However, spending on business travel in Europe is not expected to surpass 2019 levels until a year later, reaching $389.1 billion in 2024 and $414.9 billion in 2025. Europe nevertheless remains the third biggest regional spender and accounts for nearly a quarter of global business travel spend.
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INFLATION PERMUTATIONS
The Economist Intelligence Unit's Worldwide Cost of Living report says the slowdown in inflation in 2023 "has been, at best, modest". It continues: "In 2024 we expect the lagged impact of interest rate rises to slow down economic activity, and in turn, consumer demand". The report also notes that further escalations of the Israel-Hamas war could drive up energy prices, while a greater than expected impact from El Niño would push up food prices even further. "Regional disparities may also widen, with developed countries coming close to meeting central bank targets of two per cent CPI, but many developing markets could continue to see prices soar," the report adds.
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AIR TRAVEL
+1.8%
Airfares are expected to stabilise globally in 2024, with marginal price rises – and some falls – on regional and international business routes. The global average ticket price for flights, which rose 72 per cent in 2022 and a further 2.3 per cent this year, is expected to increase another 1.8 per cent in 2024, to $780. That’s according to CWT and GBTA’s 2024 Global Business Travel Forecast, which predicts EMEA airfares will rise 2.2 per cent in the year ahead. Meanwhile, American Express Global Business Travel’s Air Monitor 2024 report predicts that the cost of economy flights within Europe will increase by 1 per cent while economy fares between Europe and North America (-2.5 per cent), Asia (-3.4 per cent), the Middle East (-2.8 per cent) and South America (-10.4 per cent) will all fall.
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HOTELS
+3.6%
Hotel rates are also expected to settle down in 2024, according to the CWT and GBTA forecast. The average daily rate shot up by 29.8 per cent in 2022 and slowed to 4.3 per cent growth in 2023, with a further increase of 3.6 per cent, to $174 per night, predicted in 2024. In EMEA the ADR rose 28.1 per cent in 2022 and 3 per cent in 2023, with another increase of 3 per cent, to $174, expected in 2024. Regional forecasts from BCD Travel put average rates in Europe 7 per cent up in 2024 and rising by 4.7 per cent in North America, by 6.3 per cent in Asia and 14.4 per cent in the Middle East. Amex GBT’s Hotel Monitor 2024 warns of steep increases in some cities where “tight supply combined with local conditions” will drive average rates up, notably Chicago (+12.6 per cent), Paris (+11 per cent), Berlin (+9.4 per cent), London (+9.1 per cent) and Shanghai (+8.4 per cent).
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MEETINGS
+3.0%
The average cost per meeting attendee per day is expected to increase 3 per cent to $174 in 2024, according to CWT and GBTA research, following rises of 5.6 per cent in 2023 and of 58.1 per cent in 2022. More than two-thirds (67 per cent) of meeting and event planners say their budgets will increase in 2024, according to Amex GBT’s Global Meetings and Events Forecast, while 82 per cent are optimistic about the health of the industry. Internal meetings and customer advisory boards are most likely to grow in volume, followed by incentives, small and simple meetings, product launches, leadership meetings and conferences.
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GROUND TRANSPORTATION
+2.1%
The average daily car rental rate globally is poised to rise by 2.1 per cent to $49 in 2024, following increases of 6.7 per cent in 2023 and 9.8 per cent in 2022, states CWT and GBTA research. Regionally, EMEA saw car rental rates increase by 10.9 per cent to $61 a day in 2022 and by 3.3 per cent to $63 in 2023, which will be followed by a 1.6 per cent increase to $64 per day in 2024. On a national level, Amex GBT predicts rental rates to increase 7 per cent in Germany, 6.5 per cent in the UK and 5 per cent in France. Smaller rises are expected in the Nordics (+1 per cent) and the Benelux countries (+3 per cent).
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